Winklevoss Twins Launch IPO for Bitcoin-Tracking Stock

Cameron and Tyler Winklevoss, twins known for battling Mark Zuckerberg over ownership of Facebook Inc., have filed for an initial public offering designed to allow investors to track the performance of digital currency bitcoin.

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Bloomberg News

The Winklevoss Bitcoin Trust said Monday in a filing with the Securities and Exchange Commission that it will sell around $20 million worth of shares, each of which will represent a fraction of a bitcoin.

The Winklevoss trust believes “that, for many investors, the Shares will represent a cost-effective and convenient means to access exposure to bitcoins,” the filing says. The filing says at the $20 million offering value, each share would represent 0.2 bitcoins.

Bitcoin is the name for both the peer-to-peer payments system that allows people to pay each other from virtual accounts accessed online and on mobile devices as well as the digital currency itself. Launched in 2009 by a developer whose true identity remains unknown, the digital money is not backed by any central governing body, such as the Federal Reserve, and allows users to remain mostly anonymous, save for their “bitcoin address,” in transactions.

The filing doesn’t list any bank as an underwriter, but lays out the case for the trust as a way for an average investor to make a wager on bitcoin.

The aim will be to have an investment that reflects a “weighted average” of bitcoin prices, the filing says. The product would operate akin to exchange-traded funds, listing on an exchange though which stock exchange wasn’t identified. The filing says it would be the first such offering of a bitcoin exchange-traded product.

Buzz about bitcoins has grown in recent months amid wild swings in the currency’s value, driven by economic turmoil in the euro zone; outages at Mt. Gox, the largest bitcoin trading exchange; and U.S. Treasury Department guidance stating money-transmitter rules that apply to the likes of Western Union Co. and MoneyGram International Inc. also apply to exchanges and sellers dealing with the currency.

Mt. Gox, based in Tokyo, last week registered with the Financial Crimes Enforcement Network, the arm of the Treasury Department that enforces the money-transmitter rules. The move followed the Department of Homeland Security seizing an account of Mt. Gox for operating an unlicensed money-services business.

State regulators have also been focusing on companies that sell and exchange bitcoin. The Wall Street Journal reported last month that California, New York and Virginia have been contacting various bitcoin companies asking them to clarify what their businesses do, a move that could ultimately prompt the states to clamp down on their activities or force them to register under their own rules that apply to money transmitters.

The Winklevoss twins became famous for their feud with Mr. Zuckerberg, Facebook founder and chief executive, over who came up with the initial idea for the social network. The litigation ultimately settled. The twins, also Olympic rowers, were key characters in the movie The Social Network.

The filing lists several risks tied to the bitcoin world, including warning that the currency’s price may remain volatile given its “relative lack of acceptance” in the retail and commercial marketplace. Also among the risks are several warnings tied to how bitcoin exchanges and the community operates, for instance, that the transactions are “irrevocable” so that “stolen or incorrectly transferred Bitcoins may be irretrievable.”